Encouraging prospects to change their behavior is one of the greatest challenges facing marketers and sellers. Behavioral economists call this phenomenon “status quo bias.” How can sellers overcome this inherent yet irrational desire to keep something the same, even if it’s less than optimal?
Before refocusing your playbook with new strategies and tactics, you must better understand status quo bias. Status quo bias is the collective manifestation of many other biases, each with its own implications for purchase decisions. Let’s look at three of these key biases.
“Losses loom larger than gains” is the most popular summation of prospect theory. In other words, people are more averse to losing what they have than benefitting from something new.
A decision maker evaluating an investment in a new software platform may think, “I might get a promotion if this project goes well but if it fails, my peers will no longer think I’m fiscally responsible.” Prospect theory suggests that the negative outcome disproportionately influences the buyer’s decision and leads towards making no decision.
Sunk Cost Fallacy
The sunk cost fallacy arises when people continue to invest resources (e.g., time or money) into an undertaking solely because they previously invested resources into that undertaking. People want to “get their money’s worth” for what they have already spent.
For instance, the manager of a work process utilizing homegrown technology may not consider a third-party solution that will improve the workflow’s performance because of the time and money already invested in the homegrown solution. Although sound financial decision making should ignore sunk cost, it is human nature to consider it.
Mere Exposure Effect
Also known as “familiarity bias,” the mere exposure effect reinforces a preference for something people are familiar with vs. something new. The presence of the status quo creates an irrational preference for the status quo. This bias is reflected in the idiom, “better the devil you know than the devil you don't.”
Using the example from above, a decision maker might make peace with an underperforming homegrown solution rather than invest in a new technology because of the risk that it could perform even worse.
If the list above isn’t enough, additional biases can contribute in varying degrees to the status quo bias:
- Anchoring bias
- Cognitive dissonance
- Confirmation bias
- Endowment effect
- Home country bias
- Optimism / pessimism bias
- Representative bias
When customers make irrational economic decisions, it’s often a result of one or more of these hidden forces influencing the decision making process.
Overcoming bias requires a careful repositioning of your marketing messaging and sales strategy. Your buyers may think that the least risky thing to do is to do nothing. Your job is to convince them that despite the risk of making a change, which always exists, not making a change has its own risks and consequences.
You can counter status quo bias by using value selling tools to identify and quantity the problems your solution solves. An assessment tool can uncover performance gaps relative to a desired state or industry benchmarks. Value calculators and ROI tools can show the costs associated with maintaining the status quo: operational inefficiency, lost revenue, and adverse events such as data breaches, unplanned downtime, and fraud.
Value selling has merit with buying committees as well. Disagreements and different agendas, which are common within buying committees, often set up a default no decision outcome.
Conventional wisdom suggests that the correct approach for solving this dynamic is to create a personalized resolution for each committee member. Paradoxically, this only creates more disagreement as each committee member becomes more focused on their issue. Instead, create a shared framework for the committee illustrating that the status quo is the greatest risk of all.
Status quo bias in all its forms influences buyers and is rooted in loss avoidance. Marketers and sellers can use value selling tools to show decision makers that sticking with the status quo is the riskiest decision to make.
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